Disruptive Technology is a term popularized
by Harvard Business School professor Clayton Christensen in his book The Innovator's
Dilemma.

Christensen believes that the main reason that successful and apparently well-run
and well established organizations loose market share, and sometimes go out of business,
is that they fail to recognize the distinction between sustaining and disruptive
technologies.

Disruptive and Sustaining Technologies

Sustaining technologies improve the performance
of established products. They are usually developed by successful and well
established companies who are often seen as holding a leadership position in their
industries.

Adding a new feature to a MIG welder would be an example of a sustaining technology.

Disruptive technologies have features that
a few fringe (and generally new) customers value. Products based on disruptive
technologies are typically cheaper to produce, simpler, smaller,
better performing, and, frequently, more convenient to use.

The transistor, compared to the vacuum tubes that it subsequently replaced, is
an example of this sort of technology. The ZENA mobile welding
system is another!

Disruptive technology products are typically simpler, more reliable, and
cheaper to mass produce -- yet also typically out perform products based on traditional
technologies. They offer a fantastic value to the retail purchaser, when compared
to existing, more expensive to produce, established technology.

Disruptive technology products generally promise retailers and distributors
lower margins, not greater profits. (30% of $500 is much less than 30% of $3,000.)

Disruptive technology products, therefore, are usually first sold in what
the established manufacturer's consider emerging or insignificant markets. (Who ever
heard of welders built into 4x4's, tractors, military vehicles, small service vehicles,
boats, etc.?)

The established manufacturer's largest and most profitable customers (in the
welding industry, this would be large welding equipment distributors, mass merchants,
etc.) generally don't want, and indeed initially aren't set up to sell or support,
products based on disruptive technologies.

Then, how are disruptive technology products sold?

A disruptive technology is initially embraced by the least profitable (and usually
the least wealthy) customers in a market. For example, in the welding field
this sort of customer would include:

Working farmers all over the world (including farmers in developing nations)

Professional welders and others who usually by used welding equipment

Companies and individuals who need a commercial duty welders but who simply cannot
afford and or justify the expense of the equipment that would do the job

Lumbermen

People operating 4x4's and other equipment and/or vehicles in remote or difficult
to reach areas

It pays to invest in disruptive technology products

Christensen goes on to suggest that the refusal by successful and established
companies or distributors to fully embrace disruptive technologies can lead to a
sudden loss of dominance in their respective fields, if not their total disappearance.

Sources:

Christensen, Clayton M. The Innovator's Dilemma: When New Technologies Cause
Great Firms to Fail. Harvard Business School Press, June 1997.